Maryland Bans And Then Unbans Kalshi Prediction Markets

Is there something in the water in Maryland or something? Out of all the legal sports betting markets, this state has proven to be the most combative.

Earlier this year, the city of Baltimore sued several of the top betting apps over their marketing practices. DraftKings, FanDuel all caught heat from the lawsuit, which is still pending.

Then more recently, the state also brought down the hammer on Kalshi, the leading prediction market in the United States. It sent them a cease and desist letter over Kalshi’s sports contracts, which they say were moonlighting as sports bets.

However, Kalshi is still up and running right now in Maryland. That’s right, you can throw money on the Ravens’ current woes at the site. So what’s going on then? Keep on reading and we’ll update you on the pesky issue, which has long-term ramifications on not just Maryland’s sports betting industry, but the country.

Kalshi Buys Time In Maryland

Kalshi should already be gone from Maryland. Regulators won their first battle in court when Judge Adam Abelson sided with the state and ruled that Kalshi’s football contracts were indeed sports bets dressed up as commodities. Normally, that would’ve triggered an immediate shutdown of the operation (in Maryland only).

But instead of pulling the plug, Maryland officials agreed to hold off. They won’t enforce their cease-and-desist order until the federal appeals court weighs in. Kalshi had requested an emergency injection of their own, which they got in a roundabout way thanks to the ruling.

Here’s what happens next: Kalshi has already filed its opening brief. Maryland has to respond by October 15, and then the Fourth Circuit will deliberate. No one expects a ruling until late this year. Until then, Kalshi will remain alive and well for Maryland users.

A Rare Court Loss For Kalshi

This isn’t the first time (nor last) Kalshi has clashed with state regulators. They’ve already taken on New Jersey and Nevada — and sort of won. Judges in those states sided with Kalshi, saying their federal license under the CFTC gave them the right to operate. Maryland, however, turned into a different story.

Judge Abelson wasn’t buying the broad argument that federal law wipes out all state oversight (yay for state rights!). He said Maryland still has authority over sports betting, no matter what Kalshi calls its contracts. He even pointed out that Kalshi could apply for a sports betting license in Maryland if it wants to stick around.

Not that Kalshi wants to do that. A major sticking point of its success so far is that it’s available even in states without legal sports betting, like California and Texas. Traditional sports betting apps like BetMGM or DraftKings don’t have the same luxury as they’re regulated differently than commodity-based Kalshi.

Anyways, the Maryland ruling is Kalshi’s first real setback, and it’s why the appeal matters so much. If Maryland’s position sticks, it sets a precedent that could inspire other states to follow suit. If Kalshi flips it on appeal, then they’ve got a stronger footing the next time a state regulator tries to push them out.

Other Operators Are Watching Maryland Decision Closely

The Maryland fight is happening against the backdrop of prediction markets exploding in popularity. Kalshi just logged back-to-back record trading days, with more than half a billion dollars in volume over one weekend full of college and football games. And we’re only one month into the football season so naturally, you’d expect those numbers to keep rising.

Other operators see that success and want a piece of the pie too. Also making the news as of late is Polymarket, which just got official approval from the CFTC, giving it a federal stamp of legitimacy that Kalshi once held as its edge (Polymarket wasn’t allowed in the United States before this). For traders, that makes Polymarket every bit as accessible as Kalshi.

Then there’s Flutter. FanDuel’s parent has partnered with CME Group — yes, the same CME that runs one of the world’s biggest financial exchanges — to launch its own prediction market. They’re starting with non-sports contracts, but let’s be real, sports will follow. And when they do, Flutter will have the liquidity and reach to become a real player in the marketplace.

Crypto.com is also pushing into the space by teaming with Underdog, sliding prediction markets into an app that sports fans already use. DraftKings has been rumored to buy the Railbird prediction market, which already has federal approval of its own. See what we mean? There’s momentum all over the place right now for prediction markets.

So yes, all this momentum is why what’s going on in Maryland matters so dearly. If regulators can shut Kalshi down by labeling contracts as “sports bets,” it threatens the whole model. Prediction markets are supposed to be federally regulated commodities, open nationwide. If that’s chipped away, the upside shrinks fast.

So the Fourth Circuit ruling will be the first big test of where prediction markets stand in the legal hierarchy — federal commodities law versus state gambling law. It’s a massive domino, not just for Kalshi and Maryland, but the entire industry.